Toll Brothers (NYSE: TOL) shares are falling today after the company announced Q2 preliminary earnings this morning down 30% from a year ago and that it expects more "challenging times" ahead. However, the stock might be getting some support from another part of the statement that indicated TOL is looking to use some of its available capital to make acquisitions at cheap prices. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on TOL.

After hitting a one-year high of $31.15 almost a year ago, the stock fell much of 2007 to hit a one-year low of $15.49 in January. This morning, TOL opened at $23.25. So far today the stock has hit a low of $22.66 and a high of $23.67. As of 12:45, TOL is trading at $23.00, down $0.37 (-1.6%). The chart for TOL looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $27.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in six weeks as long as TOL is below $27.50 at June expiration. Toll would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.

TOL hasn't been above $27.50 since June and has shown resistance around $25 recently. This trade could be risky if the company's earnings (due out on 6/3) are a positive surprise, but even if that happens, this position could be protected by resistance TOL might find around $25, where it topped out twice over the past two months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in TOL.